Help with tax and crypto
Discussion
I've been rather fortunate with crypto over the last couple of weeks (thanks to Shiba and MANA), that i have a healthy amount of profit just sitting in my account and it's growing at a rapid rate.
I'd like to take out my initial investment, just over £10K, but I'm aware that Mr Taxman will want to get his grubby mitts on my lovely funds.
The question is, who do i turn to for financial advice to withdrawal funds from my account, in the most tax efficient way possible?
Would it just be an accountant, or would i need to find one that is more crypto savvy, does it even make a matter?
Funds are held on a US based exchange and although I've converted one crypto to another, I've not actually sold anything, yet.
I'd like to take out my initial investment, just over £10K, but I'm aware that Mr Taxman will want to get his grubby mitts on my lovely funds.
The question is, who do i turn to for financial advice to withdrawal funds from my account, in the most tax efficient way possible?
Would it just be an accountant, or would i need to find one that is more crypto savvy, does it even make a matter?
Funds are held on a US based exchange and although I've converted one crypto to another, I've not actually sold anything, yet.
I'm slightly confused.
Say my initial source is £12,000 and i want to take this out of my crypto account and pop it back from where is came (normal bank account).
Would that £12,000 be classed as a gain? Or would it be anything above that initial amount?
So, i could take £24,300 out of the crypto account, and still be within my CGT limits, or does it not work like that?
Say my initial source is £12,000 and i want to take this out of my crypto account and pop it back from where is came (normal bank account).
Would that £12,000 be classed as a gain? Or would it be anything above that initial amount?
So, i could take £24,300 out of the crypto account, and still be within my CGT limits, or does it not work like that?
bunchofkeys said:
I'm slightly confused.
Say my initial source is £12,000 and i want to take this out of my crypto account and pop it back from where is came (normal bank account).
Would that £12,000 be classed as a gain? Or would it be anything above that initial amount?
So, i could take £24,300 out of the crypto account, and still be within my CGT limits, or does it not work like that?
The capital gain is the amount you've earned over your initial investment. Say my initial source is £12,000 and i want to take this out of my crypto account and pop it back from where is came (normal bank account).
Would that £12,000 be classed as a gain? Or would it be anything above that initial amount?
So, i could take £24,300 out of the crypto account, and still be within my CGT limits, or does it not work like that?
You have a Capital Gains tax allowance of 12,300 per year. So in theoretical terms 12k initial investment, 12k profit, bank it all, no CGT as you're below CGT threshold
But be aware that even just selling crypto to a stable coin or buying another crypto with it is classed as a disposal by HMRC and is a taxable event.
RichTT said:
But be aware that even just selling crypto to a stable coin or buying another crypto with it is classed as a disposal by HMRC and is a taxable event.
This was my first thought when I read the post. It's crystalised the entire profit which will will then be taxed.I'm not a crypto expert, but I can't see how it would be any different to any other capital gain.
98elise said:
This was my first thought when I read the post. It's crystalised the entire profit which will will then be taxed.
I'm not a crypto expert, but I can't see how it would be any different to any other capital gain.
UK crypto legislation is a bit crap. Why should it be considered a disposal when i trade between crypto? I've not crystalised any gains into FIAT currency or transferred it to my bank. I've swapped one digital asset for another. If the underlying asset then depreciates then a trader could be in a position where the CGT they are liable for is more than the underlying asset they bought. I'm not a crypto expert, but I can't see how it would be any different to any other capital gain.
CGT shouldn't be applicable until you convert it back into FIAT currency.
RichTT said:
UK crypto legislation is a bit crap. Why should it be considered a disposal when i trade between crypto? I've not crystalised any gains into FIAT currency or transferred it to my bank. I've swapped one digital asset for another. If the underlying asset then depreciates then a trader could be in a position where the CGT they are liable for is more than the underlying asset they bought.
CGT shouldn't be applicable until you convert it back into FIAT currency.
Why should crypto be different to anything else?? CGT shouldn't be applicable until you convert it back into FIAT currency.
Some excellent, clear, advice above.
To make the question more complicated (sorry!), how does it work if you cost average into a crypto asset, and then cost average out again? When you sell a tranch, is the gain assessed against the first crypto you bought, the last crypto bought or an average of what you paid for the crypto?
To make the question more complicated (sorry!), how does it work if you cost average into a crypto asset, and then cost average out again? When you sell a tranch, is the gain assessed against the first crypto you bought, the last crypto bought or an average of what you paid for the crypto?
PorkInsider said:
Why?
A comparative example. I own a painting. It has a monetary value, I swap it with a friend who has a sculpture. It also has a monetary value that is exactly the same as my painting. We swap. I now own the sculpture, and he owns the painting. We swapped physical assets and everyone is happy with the deal.
I own a digital asset. It has monetary value, I swap it with a stranger who has a different digital asset. It also has monetary value that is exactly the same as my digital asset. We swap. I now own his digital asset and he owns mine. We swapped digital assets and everyone is happy with the deal.
No money has changed hands, I have not gained anything other than swapping one asset for another. HMRC does not consider crypto assets to be currency or money as stated in their Cryptoassets Manual. So in what sense should I be due capital gains on it?
RichTT said:
PorkInsider said:
Why?
A comparative example. I own a painting. It has a monetary value, I swap it with a friend who has a sculpture. It also has a monetary value that is exactly the same as my painting. We swap. I now own the sculpture, and he owns the painting. We swapped physical assets and everyone is happy with the deal.
I own a digital asset. It has monetary value, I swap it with a stranger who has a different digital asset. It also has monetary value that is exactly the same as my digital asset. We swap. I now own his digital asset and he owns mine. We swapped digital assets and everyone is happy with the deal.
No money has changed hands, I have not gained anything other than swapping one asset for another. HMRC does not consider crypto assets to be currency or money as stated in their Cryptoassets Manual. So in what sense should I be due capital gains on it?
If you bought that picture for £100 and swapped it for a sculpture worth £20,000 then you have made a gain of £19,900 and CGT is due on the gain (less any unused allowance).
To the OP the HMRC guidance on crypto and taxation is reasonably clear and helpful: https://www.gov.uk/government/publications/tax-on-...
RichTT said:
98elise said:
This was my first thought when I read the post. It's crystalised the entire profit which will will then be taxed.
I'm not a crypto expert, but I can't see how it would be any different to any other capital gain.
UK crypto legislation is a bit crap. Why should it be considered a disposal when i trade between crypto? I've not crystalised any gains into FIAT currency or transferred it to my bank. I've swapped one digital asset for another. If the underlying asset then depreciates then a trader could be in a position where the CGT they are liable for is more than the underlying asset they bought. I'm not a crypto expert, but I can't see how it would be any different to any other capital gain.
CGT shouldn't be applicable until you convert it back into FIAT currency.
If that wasn't the case you could simply exchange your crypto currency for other assets like a car, a house etc tax free.
RichTT said:
A comparative example.
I own a painting. It has a monetary value, I swap it with a friend who has a sculpture. It also has a monetary value that is exactly the same as my painting. We swap. I now own the sculpture, and he owns the painting. We swapped physical assets and everyone is happy with the deal.
I own a digital asset. It has monetary value, I swap it with a stranger who has a different digital asset. It also has monetary value that is exactly the same as my digital asset. We swap. I now own his digital asset and he owns mine. We swapped digital assets and everyone is happy with the deal.
No money has changed hands, I have not gained anything other than swapping one asset for another. HMRC does not consider crypto assets to be currency or money as stated in their Cryptoassets Manual. So in what sense should I be due capital gains on it?
Yet if I want to 'swap' my Shell shares for BP shares I have to sell them them rebuy. Hence a chargeable event. Unless they're in an ISA of couse.I own a painting. It has a monetary value, I swap it with a friend who has a sculpture. It also has a monetary value that is exactly the same as my painting. We swap. I now own the sculpture, and he owns the painting. We swapped physical assets and everyone is happy with the deal.
I own a digital asset. It has monetary value, I swap it with a stranger who has a different digital asset. It also has monetary value that is exactly the same as my digital asset. We swap. I now own his digital asset and he owns mine. We swapped digital assets and everyone is happy with the deal.
No money has changed hands, I have not gained anything other than swapping one asset for another. HMRC does not consider crypto assets to be currency or money as stated in their Cryptoassets Manual. So in what sense should I be due capital gains on it?
Can you hold crypto in an ISA? Perhaps you just say to HMRC 'Hey man, it's crypto, I can do what I like'
brickwall said:
Throttle Body said:
Some excellent, clear, advice above.
To make the question more complicated (sorry!), how does it work if you cost average into a crypto asset, and then cost average out again? When you sell a tranch, is the gain assessed against the first crypto you bought, the last crypto bought or an average of what you paid for the crypto?
Disclaimer - I am not a CGT expert nor a qualified advisor.To make the question more complicated (sorry!), how does it work if you cost average into a crypto asset, and then cost average out again? When you sell a tranch, is the gain assessed against the first crypto you bought, the last crypto bought or an average of what you paid for the crypto?
To keep things simple, I’ll assume they’re all the same currency. (The same applies to shares in a company).
Essentially you work out the weighted average unit cost you bought and sold at, and therefore the gain weighted average gain on the partial disposal. If the assets are fungible then you don’t count partial sales differently against multiple purchase tranches…you simply do a weighted average.
If you’ve got multiple currencies then work out the weighted average gain/loss on each individually then sum up.
Simpo Two said:
Yet if I want to 'swap' my Shell shares for BP shares I have to sell them them rebuy. Hence a chargeable event. Unless they're in an ISA of couse.
Can you hold crypto in an ISA? Perhaps you just say to HMRC 'Hey man, it's crypto, I can do what I like'
And this is where Crypto is different. I don't have to sell one asset to FIAT to buy another Crypto, they are directly transferrable from one to the other.Can you hold crypto in an ISA? Perhaps you just say to HMRC 'Hey man, it's crypto, I can do what I like'
RichTT said:
Simpo Two said:
Yet if I want to 'swap' my Shell shares for BP shares I have to sell them them rebuy. Hence a chargeable event. Unless they're in an ISA of couse.
Can you hold crypto in an ISA? Perhaps you just say to HMRC 'Hey man, it's crypto, I can do what I like'
And this is where Crypto is different. I don't have to sell one asset to FIAT to buy another Crypto, they are directly transferrable from one to the other.Can you hold crypto in an ISA? Perhaps you just say to HMRC 'Hey man, it's crypto, I can do what I like'
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